Poonawalla Fincorp Limited (POONAWALLA.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Poonawalla Fincorp Limited Q3 FY '25-'26 Earnings Conference Call. We have with us today on the call Mr. Arvind Kapil, Managing Director and Chief Executive Officer; Mr. Sunil Samdani, Executive Director; Mr. Shriram Iyer, Chief Credit and Analytics Officer; Mr. Vikas Pandey, Chief Business Officer, Consumer Business; Mr. Veeraraghavan Iyer, Chief Business Officer, Commercial Business; Mr. Harsh Kumar, Chief Human Resources Officer and Head, Artificial Intelligence and other senior management officials. [Operator Instructions] Please note that this conference is being recorded. Now I hand over the call over to Shabnum Zaman, Company Secretary of Poonawalla Fincorp Limited. Thank you, and over to you, ma'am.

Thank you. In line with good corporate governance practices, please note this presentation may contain forward-looking statements regarding the company's future business prospects, strategies, estimates and profitability. But it is important to note that these statements are based on certain expectations, assumptions, anticipated developments and are subject to various risks and uncertainties. The actual results may differ significantly from what is stated in these forward-looking statements. Risk and uncertainties related to these statements include fluctuations in earnings, our ability to manage growth, competition, economic condition in India and abroad, changes in law, rules and regulations relating to any aspect of the company's business operations, general economic, market and business conditions, attracting and retaining skilled professionals as well as government policies and actions. Now I would like to hand over to Mr. Arvind Kapil, Managing Director and Chief Executive Officer of the company.

Thanks, Shabnum. Thank you. A very good evening to all of you. I wish all of you and your loved ones a very happy New Year. I had been open with industry and economic perspective from our side and the ways we are shaping our organization amid the current sector shifts. India's real GDP grew 8.2% in quarter 2 financial year '25-'26, up from 7.8% in quarter 1. CPI inflation progressively softened to 1.33% in December '25 from 4.26% in January. High frequency indicators signal ongoing economic momentum with inflation below the lower tolerance band falling unemployment and improved exports. Financial conditions in our assessment remains supportive with a robust credit to commerce, while demand holds steady and a strong consumption. Let me start behind the performance update. I'd like to give a quick update on the quarter 3 financial year '26 results. Our AUM, as all of you are well aware, is growing at around 77.6% year-on-year, 15.3% quarter-on-quarter, standing at around INR 55,017 crores as of December 31, '25. Total disbursements in quarter 3 financial year '26 grew by 84% year-on-year and 6.5% quarter-on-quarter. Our new product disbursements has reached a monthly run rate of approximately INR 950 crores in the month of December. New products delivered a 25% quarter-on-quarter disbursement growth, demonstrating the tangible momentum and market pull, which our new products are generating at a grassroot level to give you a nice fee. Yes, the new product contribution to disbursements in quarter 3 financial year '26 stands at 20% as compared to 17% in comparison to the previous quarter. Our on-book secured mix stands at around 56%. Net interest margin, including fee and other income stands at around 8.62% in quarter 3 financial year '26 versus 8.4% in quarter 2 financial year '26. So it's increased by around 22 basis points from quarter 2 to quarter 3. Our GNPA for quarter 3 financial year '26 stands now at 1.51% versus 1.59% in quarter 2 financial year '26. It's a drop of another 8 basis points here. Our Stage 1 assets, which I think is an important indicator for any finance company, rose to 97.4% for quarter 3 financial year '26 as compared to 97.1% in quarter 2 financial year '26. I think this is important from our efficiency improvement point of view, reflecting stronger asset quality and stable borrower performance. This improvement underscores our continued focus on prudent underwriting and effective risk management. Our stated objective is to achieve one of the best-in-class credit costs, which requires a more balanced and mature portfolio mix through which transition is already underway. We've already launched new businesses, and they will pick up scale in different proportions over years. Our cost of borrowing has reduced from 8.04% in quarter 1 financial year '26 to 7.65% in quarter 3 financial year '26. That's another 39 bps in 3 quarters. One of the key levers were the NCD contribution. It has substantially increased from 7% in March '25 to 27% in September '25 and now approximately to 30%, 33% as of December '25, adding strength to long-term capital funding. Our aim is to ensure stable and cost-efficient funding. On AI, out of the total tally of 57 cutting-edge AI projects, now we reached 30 projects are live. Let me start with how we think about credit cost and ROE because this, I believe, sits at the heart of how we are building this company. It's important that we're all on the same page. We are designing a high-quality, stable, low volatile credit portfolio, not accumulating a balance sheet. From an inception, every product we scale is built to deliver sustainable, healthy ROAs on a through-the-cycle basis. Growth is, therefore, a means to compound intrinsic value is not an objective in itself. Let's understand the role of individual products with contribution design, higher natural provision impact and the mathematical average of approximately 12 products and then 1 business of instant consumer loans, making a total of 13 products. To provide clarity on how total credit cost should be viewed in my assessment, it's very important to recognize that different lending products inherently carry different risk profiles. Instant loans by design carries a higher stand-alone credit cost, while the remaining approximately 12 lending products are more granular, diversified and comparatively lower risk. We expect credit costs across individual businesses to decline steadily over time, driven by portfolio seasoning, our solid risk calibration and strong collections, and that's going to be a big focus area for us. At the consolidated level, reported credit cost represents, and this is important, a mathematical weighted average, reflecting the proportional contribution of the instant loan business and the combined contribution of the other businesses based on their respective share of assets. Accordingly, portfolio level credit cost is a function of portfolio mix and not driven by any single product in isolation. Accordingly, movements in consolidated credit cost should be viewed as a function of changing composition of the portfolio as different businesses scale at different times. As the portfolio evolves over time, it's important to note products such as gold loans, education loans, salary personal loans and loans against property are expected to account for 50% to 60% of the portfolio. These businesses have lower inherent risk profiles, lower credit costs and the growing contribution will lead to a more balanced portfolio and assessment with growing ROAs and a sustained reduction in overall credit cost. Let me share our perspective on growth, provisioning and accounting optics in the credit business. Reported credit costs includes normal and regulatory provisioning and therefore, reflects both realized losses and prudent forward-looking buffers. Management remains focused on continuously improving credit calibration, underwriting discipline and collection efficiencies across individual lending products with an objective of strengthening overall portfolio credit performance over time. Improving ROE is a key focus area for the company. And alongside efforts to enhance credit calibration and collection efficiency within individual lending products, management is equally focused on achieving the right product mix to balance risk and returns and the objective of driving sustainable ROA improvement. Nirav will share meaningful insights and early risk indicators across products, which is quite encouraging. Let me cover my perspective on ROAs, which is going to be a key focus area for the company. We have reached an ROA of 1.2% on this quarter, quarter 3. At this junction, let me give you a sense of disbursal yield for quarter 3 financial year '25-'26. I think this would be an important metrics. The present disbursal yields pricing of new originations for quarter 3 financial year '26 is approximately 15.5%, reflecting the impact of new product launches and disciplined risk calibration across originations. The new products we have launched have scaled well and are performing in line with our internal expectations. This gives us confidence that growth is now coming from a more diversified and structurally stronger portfolio. On the risk side, credit costs are trending better quarter after quarter. The new credit calibration is behaving well. Early indicators are encouraging, and we're seeing improved performance across vintages. As committed, we have increased our disclosure wherein this time, we are sharing product level AUMs across products. And I think a very important indicator the risk team is sharing in the investor deck is the 6 MOB early risk indicators, which in my experience is a lead indicator for any finance company, in terms of what the new calibration looks like. At the same time, I do believe that operating leverage is beginning to come through. Our operating model is built to deliver structural operating leverage as we scale multiple product distributions, digital platforms, distribution partners and enhanced customer franchise with increasing cross-sell strength, fueling the strength of our operating leverage. Putting all this together, healthy disbursement yields, successful product launches, improving credit outcomes and operating leverage, we believe that the structural levers are firmly in place now. As these trends continue, we see a clear progressive buildup over the coming periods. On a customer service front, let me share an important perspective. We are launching a next-generation conversational AI platform for omnichannel customer service designed to autonomously resolve 80% of voice and chat interactions, significantly reducing cost to serve while improving customer experience. Only high empathy and exception cases are routed to human agent, driving operational efficiency at scale. Our industry-first contextual agent UI that delivers real-time intelligence, including customer history, loan risk plan and sentiment analysis enables faster resolution, higher first contact closure and improved compliance. It's important to note the platform is powered by multi-agent AI orchestration and is currently in COD testing with Hindi and English that will go live by March '26. Subsequently in phase, we will deploy AI voice agent across 6 regional languages and chatbot in 14 regional languages, unlocking mass market adoption across India linguistically diverse customer base. This, I believe, in my limited view, should transform our customer service and make it very smart. Now let me talk about a quick sense on the debt strategy. As part of our long-term debt strategy, we endeavor NCDs to be in the range of 30%, 35% of our total borrowings. We shall keep following the highest standard of governance and transparency with complete size of the ALCO and the liability management. I shall share some of the key highlights. To give you guys a sense, in line with the guidance provided during our last investor call, we've successfully raised over INR 4,500 crores by way of secured NCDs during quarter 3 and a subset of around INR 12,330 crores during the 9 months. The share of NCD in our borrowing stands at 33% as of December 31 and reach 7% as of March 31, this increase a NCD borrowing and also contribute a significant diversification [Technical Difficulty]

Ladies and gentlemen, the line for the management has been disconnected, please wait while we reconnect them. Thank you. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go ahead.

Okay. Let me just repeat the previous para. We are endeavor that AI initiatives will amplify our strengths. We have initiated 12 AI projects in quarter 3 financial year '26 across credit, collections, servicing and operations to reduce manual effort, improve decisioning and enable higher volumes without commensurate increases in headcount or expenses. Crucially, this leverage is achieved with disciplined risk management. As a result, we believe our past 18 months well calibrated AUM growth, coupled with present run rate is expected to translate into sustained profitability, driving steady improvements in ROA. And now I would like to hand over to the Chief Business Officer, Vikas Pandey and then subsequently, I think Veeraraghavan Iyer, as to give you a sense on the business updates.

Thank you, Arvind, and good evening to all of you. My name is Vikas Pandey, I'm Chief Business Officer for Consumer Business. Over the past few quarters, our new businesses have scaled meaningfully with constant emphasis on high-quality growth, disciplined execution and technology-led efficiency. Our prime personal loan business launched in August '24 continues to gain strong traction. In quarter 3 financial '26, we delivered average monthly disbursements of nearly INR 430 crores, reflecting growing customer confidence. What is particularly encouraging is the quality of the book. Over 70% of customers have bureau scores above 750, are salaried with category A corporates and earn net monthly income exceeding INR 75,000. This validates our risk-calibrated acquisition strategy. Digitally, we continue to raise the bar, 28% of disbursements for prime personal loan in quarter 3 were processed fully straight through with 0 manual intervention, underscoring our focus on scalable, efficient operations. Alongside digital scale-up, we are also strengthening our secured portfolio like gold loan. Our gold loan franchise is expanding rapidly, and we remain well on track with the planned rollout of new year branches during the current financial year. In gold loans, monthly disbursements have nearly doubled from INR 110 crores in September to INR 207 crores in December '25, driven by strong branch productivity. 95% of our branches are in Tier 2 and Tier 3 markets, creating high potential multiproduct distribution hubs. Early cross-sell traction from these catchments is very encouraging. Our next product, consumer durable business, continues to scale efficiently on track to reach 12,000 retail outlets by the year-end across 190-plus locations. During the festive month of October '25 alone, we disbursed INR 118 crores to 54,000 customers entirely through a seamless digital journey, demonstrating both scale and execution capability. OEM partnerships are expanding across mobile and consumer durable segments and the PFIN EMI card has seen strong market acceptance with preapproved limits and availability across all touch points and now live on our app and website, the card is becoming a powerful enabler of repeat usage and customer stickiness. Our next product, commercial vehicle business has delivered average monthly disbursement of INR 100 crores in quarter 3 financial year '27, representing 35% quarter-on-quarter growth. Used CV financing continues to anchor the business, contributing over 70% of disbursements. We have significantly expanded our channel ecosystem to 700-plus partners, up from 450 last quarter and now operate across 55 locations with strong momentum in Gujarat, Rajasthan, Tamil Nadu and Maharashtra. Next product, education loan. In just 9 months since launch, the education loan business has launched 16,000-plus files supported by a network of 325-plus consultants and partners. By financial year '26 end, we aim to expand our consultant network beyond 500 plus. Our disbursement in the month of December has reached INR 118 crores. Our instant sanction journey in education loan has crossed 300 sanctions, valued at INR 150 crores year-to-date. Now coming to our digital marketing strategy. It continues to evolve toward a diversified ROI-led AI-first model with 5 key focus areas. The first one, deepening our digital partner ecosystem. We now work with 38-plus digital partners, driving 42% quarter-on-quarter growth in disbursements while reducing platform concentration risk. Second, driving cost efficiencies through technology-led innovations. Our paid campaigns have seen efficiencies from near real-time data sharing and will continue to optimize and drive precision with the upcoming server-to-server integrations. Third, we have further improved our website performance through faster load times, better discoverability and SU-led enhancements. We have also stepped up our presence of website through content presence across the relevant external platforms. This has driven over 150% quarter-on-quarter growth in our visibility across Google's AI-driven search and discovery results. Fourth, our MarTech stack now embeds AI across all channels, allowing us to run at scale experiments on content, timing, channels to drive better retargeting, superior convergence, lower acquisition cost and improve customer lifetime value. Fifth and the last, our contextual and AI-enabled brand investments are helping reinforce brand trust and salience while remaining closely linked to business outcomes. So finally, across businesses, the common thread is very clear, credit first compliance-first approach, disciplined execution, scale with quality and leverage AI and technology as a force multiplier. We are building platform and portfolios designed not just to grow faster, but to grow better and compound over time. Thank you. And now I hand over to Veeraraghavan to give you all a flavor on commercial business.

Good evening, everyone. My name is Veeraraghavan Iyer. I am the CBO of Commercial Business. The commercial business basket of products consists of loan against property, business loans, loan to professionals, medical equipment loans, machine loans, shopkeeper loans and mid-market finance. Over the past 18 months, we have built the commercial business around 3 important vectors. The first important vector is people. People are the key to success of any business, and we have meticulously worked on the same to build winning teams across verticals. The second most important vector is distribution. In distribution, we have not only worked to increase our reach into new markets and channels, but also work to penetrate deeper in existing markets and channels. This we have done by closely working with our channel partners using our decade-long relationship with them and by providing them with superior tax and service. Also, we have invested in our in-house direct distribution channel, which would operate mainly out of gold loan branches launched, sourcing all commercial retail products in the catchment areas and locations. The third most important vector is infrastructure. By infrastructure, I mean process infrastructure, policy and product. We have concentrated on the 3 Ps of process, product and policy, redefined them, reengineered them for customer delight. Bringing in best-in-class tech by leveraging on our digital expertise. By doing this, we have succeeded in growing all commercial products with our risk first, governance-first approach. Here is a detailed breakup of the commercial business numbers. Commercial business AUM stands approximately at INR 33,700 crore, exhibiting a very robust growth year-on-year. Our LAP AUM stands at approximately INR 15,100 crores and is the major contributor to the commercial business AUM. Our unsecured business loan, loan to professionals and shopkeeper loan AUM stands at approximately INR 8,000 crore, growing substantially year-on-year. Our medical equipment and machine loan AUM stands at INR 660 crore. We have now built the base to grow this book aggressively going forward. Our mid-market AUM, which includes NBFC and supply chain finance stands at approximately INR 9,400 crores. Approximately 72% of the commercial business AUM is secured in nature. As mentioned earlier, we started our in-house direct distribution channel sourcing all commercial retail products around 9 months back. And I am happy to announce that this non-DSA channel has started contributing approximately 22% of the overall commercial retail loan disbursements. We are on track to achieve 40% to 50% of the total commercial retail disbursement through the direct channel over a period of time. As the share of the direct channel disbursement increases in the overall mix, it reinforces the strength of the Direct Distribution Non-DSA channel, leading to sustainable profit of the commercial retail products. On the digital front, we are ready and piloting our straight-through digital business loan offering, which will be the first of its kind in the self-employed space. We are also enhancing the product suite in the machine loan and medical equipment business by launching the lease business. Summing it up, we believe that the commercial business has methodically implemented the plan with risk first and governance first framework and build the foundation for industry-leading growth in all commercial business products as the commercial business remains one of the most important vectors in the overall PFL strategy. Thank you. Now I hand it over to Harsh to brief you on digital and AI initiatives.

Thank you, Veeraraghavan. Good evening, everybody. My name is Harsh Kumar. I am the head of Artificial Intelligence. I want to take you through what we are doing in AI. AI continues to be a central enabler of our operating model transformation. In Q3, we advanced our AI initiative focused on lifting productivity, reinforcing governance and streamlining customer and employee journeys. These actions materially strengthen our ability to scale efficiently and deliver sustained performance as we transition towards a more intelligent and data-driven operating model. We have built a governance framework for all our AI projects, incorporating the 7 sutras as defined by the regulators. This has been adopted to ensure consistency of delivery along with safety and accuracy. To give an update on AI landscape at PFL, I would like to take you through a few of the major projects introduced across the organization in the last quarter. IT development team has taken significant steps to accelerate and optimize the application development life cycle with the introduction of BuildBuddy, an AI-powered assistant acting as a development body that aids in writing code and also suggest fixes before code is committed. It does this by providing contextual feedback on logic, performance and readability, along with automated refactoring. The rollout of DART Genie an AI-driven natural language insight engine empowers internal team to access data insights simply by asking questions in plain language. Currently available in the operations and HR team, this capability reduces dependency on specialist support and accelerates decision-making at scale with plans to extend its reach to other functions, including customer service and finance. Within risk team itself, we have delivered an AI-driven solution that aids in post-sanction review for the personal loan product by enabling teams to operationalize a comprehensive risk hindsight process. The system automates document interpretation, field-level validation and detailed audit logging, materially improving accuracy, reducing manual intervention and strengthening the discipline of our risk governance. The next step is to extend risk hindsighting framework enabled by AI across broader lending portfolio. To aid our strategic initiatives, we have created an AI-powered competition benchmarking engine that on its own searches for changes, analyzes market and competition and delivers timely insight on pricing and product shifts. By embedding AI into our strategic decision-making, we are not just benchmarking competitors. We are building a future-ready financial organization that leads with insight, agility and customer centricity. We have our in-house employee support assistant by HR that has been enhanced with additional agent-driven capabilities. This smarter AI-powered solution executes contextual actions such as instant various employment-related document generation with improved accuracy and intelligence. By introducing autonomous agent-driven workflow, the tool significantly improves employee experience and enables HR team to shift their focus towards strategic initiatives. We have introduced our central KYC AI platform, embedding upfront AI-driven checks into KYC workflow. This brings intelligent upfront validation of KYC data, reducing manual intervention by roughly 15% and materially strengthening both accuracy and turnaround performance. Credit AI, our AI-enabled underwriting support engine has achieved full adoption in personal loan underwriting, significantly enhancing productivity and enabling underwriters to concentrate on risk judgment over manual processing. We have started scaling this across our broader portfolio and the upcoming launch of Sathi will add a new layer of AI-driven portfolio intelligence. We have also launched a multilingual AI-driven conversational agent that initiates call to prospective customers. Streams them on key eligibility parameters, validates interest, captures required data initiates the loan journey before connecting them to respective teams based on their requirements. This brings more contextual and consistent conversation and improves productivity and conversion rates in key customer acquisition units. This solution is currently implemented for specific business units with plans to extend the same to other product lines. In conclusion, AI initiatives delivered in Q3 FY 2026 constitute a significant advancement in the organization's ongoing transformation. They enhance the effectiveness of our workforce, reinforce the robustness of our governance framework and enable a more seamless and intuitive experience for our stakeholders. More importantly, these initiatives further accelerate our long-term vision to become a digitally fluent, data-driven and highly scalable financial organization with AI-first approach being adopted across functions. I would like to now hand over to Mr. Shriram Iyer, our Chief Credit and Analytics Officer.

Thank you. Thank you, Harsh. Good evening, everyone. I'm wishing you all compliments of the season. The economic landscape has observed a series of monetary policy adjustments, including cumulative repo cuts of 125 basis points since February, GST 2.0 rationalization and tax reforms highlighting government's aim to support growth and enhance liquidity in the system. The upward movement in the consumer vehicle sales in Q3 FY '26 reflects positive movement in domestic demand, resulting in improvement in credit offtake. India's outstanding loans grew at around 11% year-on-year and positive economic moments favor growth opportunities. Poonawalla Fincorp is aligned to this positive moment and focus towards building a resilient portfolio. Effective orchestration of risk-calibrated framework has supported growth trajectory, ensuring stability and predictability in business performance. Risk, credit and collections working in synergy are the backbone of a resilient and well-structured portfolio. Focusing on the asset quality, let me give you a glimpse of our key trends. The GNPA has improved to 1.51% in quarter 3 FY '26 versus 1.59% in quarter 2 FY '26. Over the last 4 quarters, there has been a sequential quarter-on-quarter improvement in Stage 1, Stage 2 and Stage 3 composition of assets, which highlights our calibrated approach to portfolio expansion and strengthened debt management practices. Stage 1 composition in quarter 3 FY '26 is at 97.4% versus 97.1% in quarter 2 FY '26. Stage 2 composition in quarter 2 (sic) [ quarter 3] FY '26 is at 1.1% versus 1.3% in quarter 2 FY '26. The Stage 3, the GST composition in quarter 3 FY '26 is at 1.51% versus 1.59% in quarter 2 FY '26. The quarterly credit cost has improved to 2.62% for the quarter 3 FY '26 versus 2.67% for quarter 2 FY '26. For all products other than the instant consumer loans, the quarterly credit cost has been a range bound around 1.4% to 1.5% for quarter 3 FY '26. Our endeavor is to be committed to a stated objective to hold best-in-class credit cost in the industry. Let me highlight how we are aligning our credit philosophy into action. The first key aspect being credit by design. We expect a structurally improving asset quality trajectory driven by deliberate choices in product mix and disciplined risk calibration -- portfolio will be focused on products and customer segments that have inherently lower risk and more stable behavioral patterns. Our focus is on salaried low-risk asset class. Loan against property book has a portfolio LTV of around 45% to 50% of the market value, providing higher margin against outstanding principal. 70% of our exposures are extended against self-employed -- self-occupied residential or self-occupied commercial properties. 85% of our customer profiles being catered to the segment that has a bureau score of 750 plus. Early risk indicator of 6 MOB 30-plus delinquency ratio for LAP portfolio remains strong at a sub-0.05% level. Gold loans portfolio is built with a skew towards emerging affluent households with strong upward gold rate momentum, right customer profile selection gives us additional cushion to unforeseen market fluctuations. As of quarter 3, FY '26, there are no accounts that have crossed 30 DPD. Education loan exposures are driven towards students opting for top-tier universities, post-graduation international courses and well progressive households. Students' credibility, along with backing from strong parental credit history provides alignment towards financial resilience. Repayment performance is showcasing robust portfolio buildup. Commercial vehicle business offers secured and income-linked finance. 75% of our portfolio is built by used commercial vehicles. 60% of the customer segment is large fleet operators, providing long-term stability. As of quarter 3 FY '26, there are no accounts that have crossed 30 DPD. Unsecured personal loans to salaried professionals being built is skewed towards higher bureau score. 70% of our customers have a bureau score of 750 plus. 75% of our portfolio is working with top corporates. The 6 MOB 30-plus delinquency remains range bound at around 0.4%. Instant consumer loan is driven by existing to credit profiles, non-credit hungry and skewed towards formal credit-rated cohorts. Even this is a digitally sourced book, the 3 MOB 30-plus delinquency metric serves as a more reliable indicator of digital acquisition quality. We are pleased to report that this metric has shown consistent improvement quarter-on-quarter basis with the Q3 FY '26, reflecting a 70% improvement compared to Q3 FY '25. This positive trend underscores the effectiveness of our good strategies and continued focus on portfolio quality. Consumer durable funding is skewed to existing to credit, along with sizable influence of credit diversified borrowers within ETC segment. Right cohort selection and consumer durable business also sets precedents to control and minimize cash funding and fraud risk events prevalent in this product. Our CD is a lower tenure book, the early vintage risk are tracked at a 2 MOB 1-plus, which is at 0.15% and 3 MOB is at 0.06%. This metric has also been showing encouraging trends over the last 3 months. Business loans portfolio growth is driven by customer segments with controlled lender position, credit history over 5 years, controlled unsecured leverage, non-credit hungry profiles, profiles with around at least 2 business cycles seasoning. The 6 MOB 30-plus delinquency trend is range bound for around last 2 quarters is 1.15%. Preowned car mix is driven towards profiles with controlled recency of exposure built seasoned credit history for over 5 years plus. The change in the mix of the portfolio has reflected an encouraging reduction of 15% in 6 MOB 30-plus performance in quarter 3 FY '26 versus quarter 2 FY '26 and around 30% reduction as compared to the same quarter previous year quarter 3 FY '25. PFL continues to manage risk in alignment with banking standards as reflected in our 30-plus delinquency results, which benchmark favorably against peers. There has been a sequential improvement in the 6 MOB 30-plus for the last 4 quarters. The 6 MOB 30-plus for sourcing of quarter 1 FY '26 is 1.34%. This demonstrates the improved quality of a new acquisition. We expect credit costs across each of our individual businesses to decline steadily over the coming years, driven by improved portfolio and disciplined risk calculation, the strong collection efficiency across products. In addition, we have consciously invested in products that have combined high ROA potential with structurally lower credit costs, which will further support improvement as the portfolios mature and their sizes increases. At a consolidated level, reported credit cost represents a mathematically weighted average of our portfolio comprising of 4 business lines and 1 instant loan business. The consolidated figure primarily reflects the portfolio mix, particularly the relative weight of the instant loan portfolio versus the rest of the portfolio. Accordingly, movements in the consolidated credit cost should be viewed as a function of the changing composition of the portfolio as different businesses scale at different rates. Over time, products such as gold loans, education loans, salaried personal loans and loan against property are expected to contribute an increasingly larger share of the portfolio. These businesses have lower inherent risk profiles and lower credit costs and their growing contribution will lead to a more balanced portfolio with growing ROAs and a sustained reduction in overall credit cost. Overall, our focus is to build the company on a strong ROAs and for which we will mix the well-calibrated instant consumer loans with the rest of the products, so the mathematical mix of well-calibrated portfolios builds a stronger value proposition. Second key aspect as we grow the book is calibration, quality and pace. The calibration drive is focused on optimized cohort selection via multi-source inputs. Information covers is not just limited to existing relationship behavior with PFL. We also look at bureau overall credit exposure history, banking via the account aggregator, GST, salary and partner data. Augmentation of risk strategy via in-house proprietary models at products and cohort level are used as lever for optimizing risk metrics. Across the model life cycle from design to development to post-deployment monitoring, the model strength and accuracy are rigorously tested. This is augmented with a real-time through the door monitoring to control the expected PD against the benchmark. As we speak, the decisions across credit life cycle are supported by 50-plus AI/ML models and designed with over 5,000-plus feature evaluation. Further, given the portfolio buildup phase, dynamic model calibration with 4 months to 12 months supports the continuous improvement. As I conclude, together, the step-by-step execution across origination, risk containment and collections is translating into a structurally stronger portfolio. This approach is delivering cleaner incoming cohorts, lower embedded volatility and sustained improvements in collection efficiency over the cycle. Thank you. And now I hand over to Mr. Sunil Samdani.

Thank you, Shriram, and good evening, everyone. Let me quickly take you all through the financial highlights for the quarter. The assets under management stood at INR 55,017 crore, representing a growth of 77.6% year-on-year and 15.3% quarter-on-quarter. As part of our debt strategy and projected AUM growth, we continue to diversify our liability book, focusing on long-term borrowings. Hence, the share of long-term borrowings has gone up by about 4% from 80 to 83, 84 in an overall borrowing. The share of variable rate borrowings stood at approximately 50% with another 9% of capital market borrowing with an average tenure of approximately 3 months. The judicious use of short-term borrowing has helped us maintain our cost of borrowing at competitive levels. Our net interest income, including fees and other income continued to grow healthy, standing at INR 1,080 crores for Q3 of FY '26, which is up 19.3% quarter-on-quarter. This is despite maintaining a healthy share of secured asset book at 56%. The cost of borrowing reduced at 7.65% for the quarter versus 7.69% in Q3 of FY '26. This is on account of overall reduction in the interest rate environment in Q3 of FY '26. OpEx to AUM for the quarter was at 4.41%, a reduction of 40 basis points quarter-on-quarter, primarily on account of improved productivity and efficiency. Further, this reduction is despite continuous investments in new businesses and distribution. We have expanded our branch network to 320 branches as on date and increased employee strength to 5,264 as on 31st of December 2025. The fee-provisioning operating profit during the quarter was INR 528 crore, which represents a 36.5% increase quarter-on-quarter. The asset quality improved quarter-on-quarter with gross NPA at 1.56%, which is an 8 bps reduction quarter-on-quarter and net NPA reduced to 0.80% against 0.81% previous quarter. Our profit after tax stood at INR 150 crores for the quarter, representing a 102% growth quarter-on-quarter and 702% growth year-on-year. We can now see the benefits of AUM growth and investments in the new businesses coming in. The debt-to-equity ratio stood at 4.25x, which gives us headroom for growth. The capital adequacy ratio continues to remain healthy and comfortably above the regulatory requirement at 18.17%, of which the Tier 1 capital is at 17.15%. The liquidity coverage ratio at 156% as on December 31, 2025, is well above the regulatory requirement of 100%. On the liquidity front, we remain comfortable at a surplus liquidity of INR 6,488 crore, as of December 31, 2025. Thank you. Happy New Year, and I would now like to open the floor for question-and-answer session.

[Operator Instructions] The first question comes from the line of Chintan Shah with ICICI Securities.

Congratulations on the strong set of numbers and crossing the 1% ROA mark. So yes, my first question is on the asset quality. So if I look at the provision coverage ratio for Stage 1, Stage 2 as well as Stage 3, it has been coming off since the last 4 quarters. Since December '24, the Stage 3 PCR is almost down 10 percentage to 48% now versus 57%. Even the Stage 1 and 2 PCR combined is now less than percentage versus 2.8%, a year ago. So considering that 44% of our book is currently still unsecured, so where do we see this number settling at a -- on a steady state basis? Yes, that's the first question?

This is Shriram here. See, as I said, there is a change in the product mix. And if you see your Stage 1 book has increased from 97.1% to 97.4%. And if you look at even prior to 4 quarters, it was close to around 95-point something. So we are seeing that the Stage 1 asset itself has increased. So in terms of the overall Stage 1. Another important point to note here is the Stage 3 book has also reduced from 1.59% to 1.51%. That kind of explains the reduction in the PCR, right? Also, you have to note that the reduction in the PCR is also on account of the rundown of the old STPL, which had a higher provisioning. So as the product mix changes and when you have low risk kind of assets, the ECL also kind of changes accordingly, and that's the reason your PCR is lower.

So in terms of a steady state, so something around 50% PCR on Stage 3 could be considered from a 1- or 2-year perspective?

I can't comment on that because these products as we -- as the mix changes and we start scaling up, we may look at a time horizon is something which we'll have to look at and based on which the provisioning will be made.

But I think on the calibration, let me just add, Chintan, that we've this time disclosed very precise, I think if I'm not mistaken, 1.5 years approximately, 6 quarters of data for 6 MOB, which will give a very good insight into how we are underwriting and what's the bureau-based information in terms of the quality on our entire book. I think that could be very, very -- other than Stage 1, that's another very strong first time we've disclosed that should give you a complete insight and confidence into the solid credit calibration underwriting that we have been speaking about.

And sir, if you could just help me with the write-off policy for our unsecured products, what would be the write-off policy on that?

180 DPD.

Over all the products, whether a secured, unsecured?

Yes. So unsecured is 180 DPD. Vehicle secured is 365 DPD. And loan against property is 730 DPD, which actually indicates the [indiscernible].

And just one more thing. On this 294 branches and currently 320, I think, which you mentioned. So apart from gold loan, what all products would we be currently offering? So what's the plan there? Just wanted to understand there.

I think our branches that we are talking about are focused -- our gold loan branches are going to be fairly direct gold loan branches. That's the plan right now. And that's what I had mentioned last time. We are a very focused product on the branches. There will be some benefit of cross-sell, but I think it's going to be a very gold kind of branch, which is focused.

And sir, on this new disbursement, which is like 20% of the overall disbursement...

Often cross-sell might happen, but directionally, it's a very focused gold loan branch for us. Sorry, you were asking a question?

No, no, sorry. So basically, dedicated gold loan, but some other benefit from cross-sell and we won't deny that...

When you have a gold loan and it's from their view, it's not like other cases won't happen, but we are a focused branch is designed for gold loan. That's all as admitted point, yes. Sorry, over to your question.

Understood, sir. And sir, on the disbursement from the new products, which was currently around 20 percentage for the quarter and 11% of the AUM. So any ballpark target here? So what kind of percentage in the overall AUM mix are we looking for the new products, say, by the time we reach INR 1 lakh crore of AUM?

I think -- see, the plan on these new products are they're well calibrated. We are servicing a very distinct objective. Personal loan is a very salaried. We are getting fantastic -- we are very happy with the way it's building up, acceptability of corporates. You heard that it's high-quality asset. If you look at consumer durable, we're investing behind the customer franchise. If you look at commercial vehicles, it's picked up very good momentum. If you look at gold, I think it's continuously quarter-on-quarter building up fantastic. So objective is going to be -- we will keep investing behind these businesses to increasing. But remember, a bulk of the heavy lifting investing has been done. And I think we will -- it will be probably fair to say that operating leverage will start kicking in now. And that was the whole original plan. So we had said that the first 18 months, we would be probably biased to a little more AUM and investments. I think all that heavy lifting done, you started to see probably operating leverage started to kick and you can start seeing the spots now in terms of probably robust profits to -- you can start smelling that. And I think we are very excited from here on.

[Operator Instructions] The next question comes from the line of Abhijit Tibrewal with Motilal Oswal.

First question is on the loan and CD business. What we heard in the...

Your voice is not audible, but you have to be slightly louder. I can't hear you.

Is it better now?

Yes. Better now.

Sir, the first question I had was on the gold loan and the CD business. What I heard during the opening remarks is we have crossed 300 gold loan branches. But when I see our presence, it is predominantly the Western India, Gujarat, Haryana, Rajasthan, Maharashtra. So if you could just help us understand is the idea to first capture the central and northern part of the country and then eventually Pan India? And consumer durable also, I kind of heard that 90% of our dealer presence is somewhere in Tier 2, Tier 3 cities. So what is the playbook, which will be there in CD as well?

I could hear your full questions, but gold loans, I think if you're asking effective quarter 3, I think we should be in the range of approximately 191, 192 somewhere there. But we are -- all the LOIs, identification over has been done and the remaining branches, we should be on track in this quarter. And we should be in a position to build a very solid franchise, like I said earlier, with a focus on gold. Gold is giving us good yields, good asset class, and it's in line with plan. On consumer durable, whatever little I could hear, please correct me and add to the question, whatever I understood you said, what's the momentum feel on Tier 2, Tier 3 cities. I think if I'm not mistaken, we already had close to 10,000-plus outlets. And our strategy is a mix of consumer durable and because we've got as a company strong strength on unsecured digital, we don't need additional manpower, and we are finding that, that experiment started as an experiment probably. Now along with consumer durable, we could be the first company that our resources are not only doing consumer durable, but digitally we have a certain proportion of origination, which is coming with the same team on unsecured digital loans and very successfully so. And remember, just to give you a sense, the consumer durable might have an average ticket size of, let's say, INR 28,000 approximately. But an unsecured loan in throughput could be INR 4.5 lakhs to INR 6 lakhs. So the throughput and productivity of the team with the yields, even at the point of origination, not at cross-sell, we could be the first company to successfully pull it off. That itself gives us a huge advantage on the consumer durable reach and the business model being more robust than a conventional pure only consumer durable model is the same. I hope I'll be able to get it across.

And is the line better now? I'm sorry, you could not hear me earlier.

Basically, your voice goes clear and then suddenly, we can't hear you, something like that. But please go ahead. I can hear you clearly.

Sorry about that. Sir, that answers my question. The only other follow-up I had on gold loans was, I mean, right now, I see the branch presence is predominantly in Western India. Is that the thought process to first capture Western India, Central and Northern and then move to the Southern India?

So yes, so we are going to be -- actually, we have covered already Gujarat, Maharashtra, Rajasthan. We are going state by state because gold loan is a product where you have to have a supervisory debt because we're opening branches. So the next geography which we are picking up now is Karnataka and some part of Odisha. So that is how we will spread our branches.

The whole idea is that you don't want to just spread yourself in gold. It's important. We've done this business in the past, very important to have density pockets with supervisory debts because one of the biggest advantages and risk is you need very solid controls when it comes to gold branches. You will appreciate that. So that's the background.